Brexit – How Cameron needs to negotiate whether we leave or stay

Whatever happens in the poll on June 23rd, David Cameron will be doing plenty of negotiations from June 24th onwards, both with the European Union and within his own party. So what strategies should he be taking?

The odds-on favourite with the bookmakers is that we will stay within the union and if this happens there will be no need for too much negotiation with Europe, most of that already took place earlier this year.

The mother of all negotiations

Clearly, though, if the vote is to leave, the mother of all negotiations will begin. And the first thing he will need to consider is the end model – does he want to join the likes of Liechtenstein and Iceland in EFTA or does he want to create a unique model for the UK? The former will be much quicker, the latter will obviously create a result closer to the Brexiters desired vision.

The desired model for some is complete sovereignty over regulations whilst retaining access to the single market without incurring any extra tariffs. This is impossible so some solution in between will be necessary. The closer they stay to the existing situation, the quicker the talks but the less the Brexiters will be satisfied, so unrest could linger and potentially resurface further down the road.

Speed, by the way, is relevant. They will have two years to agree terms of withdrawal and the closest precedent we have is Greenland, whose negotiations took 3 years and, according to one diplomat, the only topic for discussion was fish. Should an agreement not be found in the time, trade terms will default to WTO standards, that is, no single market benefits for the UK.

Of course, not everything needs to be agreed straightaway. They may prioritise certain issues like deregulating bananas and entrance to the Eurovision song contest – but this approach will be slow.

Negotiate hard or soft?

There are reasons to support a hard negotiation approach, Europe knows it would be worse off without us so it does not want to lose us. Plus we have a trade deficit with the union.

On the other hand, our deficit is primarily with Germany, the Netherlands and Spain, which leaves 24 countries with whom we actually have a trade surplus. And France and Germany both have elections in 2017 with significant threats from anti-EU parties so they will want to demonstrate a high cost to exit. So we will need to tread carefully because any of the 27 countries could scupper the deal.

Either way, the UK will need to be very diplomatic in their style, if not demands, the danger of their fellow negotiators’ exasperation is high. They have already given us ‘special status’, now we are demanding more concessions and even these might not prove enough for the Brexiters – it just may exhaust the goodwill available.

Negotiating within the Conservative Party

From Cameron’s personal perspective, equally important to any negotiations with Europe are the negotiations within his own party.

Again, he will want to work from the end result backwards and for any Prime Minister the ultimate end result is their legacy. Worst case scenario or not, there is a real danger that under his watch, the UK leaves Europe, Scotland leaves the UK, we lose our place at the UN Security Council and Great Britain becomes England, a small irrelevant country in the North Atlantic, alongside Greenland, Iceland and the Faroes.

Equal is the danger of an irrevocable Tory party split, again under his watch. The referendum is seen as Tory vs Tory, with Labour keeping a low profile. The closer we get to the vote, the more malicious it will become. Whatever the result of the poll, the bitterness may be too great for some to swallow and the possibility of defections is high.

He has seen the examples of Blair and Brown, both of whose stock plummeted after leaving power and he will be acutely conscious of the same happening to him. For him to prevent this, he will need to stay in power to manage the process but this may not be possible.

Act quick and bold

The large majority of Tory MP’s will want unity after the election, no matter which way the vote falls. But, equally, a loud minority will want blood whatever happens. A challenge on the leadership requires 50 MP’s to write to Graham Brady, the chairman of the 1922 Committee. Perhaps a greater risk is he stays in power in a lame duck administration. He has a working Parliamentary majority of 16 but there are probably 25 backbenchers who value leaving Europe more than anything else. Out of spite, they could make governing impossible.

So, given all this, what should he do?

Leave or remain, he will need to act quickly and boldly, simultaneously going on the offensive whilst keeping key people onside. Michael Gove is not after Cameron’s job but if he was given the Deputy Leader’s role it would be great for party unity. At the same time, to demonstrate his authority, he would need to make some high-profile casualties – Chris Grayling or Theresa Villiers would be relatively easy targets, John Whittingdale slightly more problematic because of his Vice-Chairman role in the 1922 Committee. A small promotion or a small demotion for Whittingdale could equally be part of his strategy.

And Boris?

But what to do with Boris? If the vote is to stay, Cameron will lean on him politely: “I’m going to step down before the next election. Cause problems now and I will do everything I can to prevent you becoming next leader.” But if the Leave campaign win, he will have to do more. He could nominate Boris to lead the negotiations with the EU. This would simultaneously get the main troublemaker on board and solve the legacy issue, any risk now transfers to Johnson.

And if Johnson still causes trouble? He would probably respond indirectly and use party grandees like Heseltine, Patten or Clarke to attack him. But he would never do that, would he?